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A Treat for Big Business, Not Taxpayers

President Donald Trump wants to treat us to a trillion-dollar investment in infrastructure building – roads, waterways, electrical distribution, airports and the like. Arguably, the treat is also intended to distract the public from former FBI Director James Comey's testimony Thursday, Russian hacking and more, but his investment would be a big win for the economy – and it would rightly give Democrats something to worry about.

Done right, infrastructure makes the economy more productive. It creates jobs and makes life easier and healthier for the people who depend on it for transportation, power or clean water. But while the benefits of infrastructure are broadly acknowledged, the challenge is that someone has to pay for it. We can pay for it in a clear-cut and accountable way, or we can play games that disguise who is paying, who is being paid and how much it really costs. That's the Trump plan.

Let's take a simple example. Suppose you have a freeway in your town. It was built in the 1960s, and it's full of potholes. The bridges and overpasses are crumbling. How can we pay for repairs?

We have three choices: First, we can pay for the repairs directly with government money – in other words, taxes. Second, the government can borrow money, use the loan to pay for the repairs and then pay off the loan from taxes or tolls, or some combination. Both of these methods are well-known and have been used for years by both Democrats and Republicans. These methods are fiscally responsible, publicly accountable and fully transparent; they work.

Unfortunately now there's a problem. Current Republican orthodoxy opposes nearly all taxes, and so most Republicans can't endorse infrastructure building if it involves taxes. So to build infrastructure, we must turn to the third option: Get someone else to pay for it.

But who? Trump's plan is to get private corporations and private investors to pay for repaving your freeway and rebuilding your bridges. The government would put in about 20 percent of the money and get private parties to put up the rest.

But if private parties put up the money, won't they insist on a profit? Indeed they will, and Trump's plan involves giving away the public's money in complicated backdoor ways, to attract private investors while appearing not to be raising taxes or increasing government spending.

The plan has three parts to it:

First, give construction companies and private investors a big tax break so they are willing to invest more money knowing they won't be taxed on the profits they make. But this is still government spending, even though it's not generally described as such.

Second, the government can hand over public assets (like the air traffic control system) to a private entity that can then turn around and charge the government for services. This too is just a way of taking assets that the people own and giving them to corporations.

Third, the government can give private corporations the right to take money from someone else, in this case, you. This worked out terribly in Chicago, when the city sold to a private corporation a 99-year lease on the city's parking meters, in order to cover a short-term budget shortfall. The corporation immediately exploited the situation by raising parking rates and extending the hours of metered parking. Chicagoans are angry, but there's nothing they can do except wait 99 years.

These complicated ways to transfer public wealth to private corporations go under the benign-sounding name of "public-private partnerships." Sometimes these work well for the public. More often, they don't because the private entity is much more sophisticated, skillful and determined in the negotiation than the government entity. These deals usually cost the government far more than what it would cost to borrow the money, fix the freeway and pay it back the loan with interest.

And yet, there's more. To make matters worse, the Trump budget proposes to cut infrastructure spending to the Highway Trust Fund, Amtrak rail service and other places. Put the Trump budget together with the infrastructure plan, and it's clear that the goal is to reduce government spending in order to justify tax cuts, while at the same time giving public assets to private corporations and then inviting those same corporations to overcharge the consumer for their use.

It's no surprise that most of the media and policymakers are treating the infrastructure plan like poison candy. You should too.

David Brodwin is a co-founder and board member of American Sustainable Business Council. This blog is adapted from a column recently published in U.S. News & World Report June 9, 2017.